The impact of IT on decision structure and firm performance: evidence from the textile and apparel industry

Clarifying the relationships between information technology (IT), organizational performance, and decision structure remains an important area of inquiry in IS research. Through an empirical analysis and complementary case examples, our study examines these associations among firms operating in the US-based apparel and textile industry from 1992 to 1997. Based on data gathered from 50 public firms located across the USA, the study finds that IT used to enhance internal communication supports a decentralized decision structure, which in turn is associated with higher financial performance. Hence, IT exhibits an indirect performance effect. However, use of IT to enhance communication is also found to have a direct performance effect in large organizations. This paper proposes that use of communication enhancing IT can support organizational learning processes by facilitating flexible exchange of skills and knowledge across functional areas. Case examples are used to illustrate how these learning effects can materialize.